Debt, Credit Card & Consolidation Current News Digest

Greetings, friends. I am back from a relaxing week-long vacation in the jungles of Belize (with a one-day trip across the border to Guatemala to visit Mayan ruins — or the rebel base on Yavin IV, if you’re a Star Wars geek like me). I had a blast. I slept a lot, thought a lot about my future plans, and basically forgot about the world.

As always, coming home was overwhelming. It’s a shock to come back into the U.S. and be instantly bombarded by the constant flood of commercialism and, especially, the mass media. Plus, there’s so much junk food! For an entire week, Kris and I ate healthfully (well, except for the beer), and then the first thing I ate in the Houston airport? A pretzel dog. My stomach rebelled! Don’t get me wrong — I love this country — but it’s far from perfect, and very very insular. I wish we, as a culture, were more willing to look at what other countries get right.

Speaking of rebellion, it looks like there was a fuss over certain posts I picked for my absence. The life insurance post on Friday especially took some heat, some of which was deserved, and some of which was not. When I requested that post, I hadn’t yet written the chapter in Your Money: The Missing Manual about insurance (including life insurance), so I felt I needed an expert to respond. If I were to do it again, I’d field the question myself, and would write (as I did in the book)

The bottom line: For most people, the best choice is guaranteed renewable term life insurance.

But term life isn’t always the best answer. Cash-value policies make sense for some people, especially those with high incomes, large net worths, or small businesses. These folks should consider whole life coverage. But one point is correct: Seek advice from an independent adviser, not from somebody who has a vested interest in selling you an expensive policy.

By the way, Your Money: The Missing Manual went to the printer yesterday. It’s now available for pre-order from Amazon, and should be hitting shelves in your local bookstores in the next couple of weeks. Meanwhile, I’m already starting to think about Book #2, which would be much more of a “J.D. book”, I hope — more about my personal journey and how the lessons I’ve learned can be used by other folks, too. (Your Money: The Missing Manual has some of this, but it’s much more focused on the nuts and bolts of personal finance.)

So, the book is done, I’m back from vacation, and I’m ready to blog!

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Related Articles at Get Rich Slowly:

• A Little Bit of Blog Housekeeping
• Happy New Year! My One Goal for 2010
• The Basic Law of Frugality
• Planning a (Debt-Free) Dream Vacation
• The 63-Page Credit Card Agreement

When you get married, figuring out the financial implications can be a challenge. Do you merge your money completely? Do you keep some or all of the accounts separate? And who takes care of which household financial chores?

As difficult as marriage and money can be, things are even tougher for unmarried couples, both gay and straight. There are all sorts of legal, financial, and emotional issues, and it’s difficult for these folks to get good advice in a society that’s geared toward married couples.

While researching Your Money: The Missing Manual, I stumbled upon a fantastic book from Cheryl Garrett and Debra Neiman (both of whom are certified financial planners). In Money Without Matrimony (Dearborn 2005), Garrett and Neiman provide tons of advice to help unmarried couples plan their financial futures together.

Unique problems
According to the 2000 U.S. Census, 5.2% of American households contain “unmarried partners”. Of these, 89.1% are male/female partners, 5.5% are male partners, and 5.4% are female partners. The authors divide these groups into younger heterosexual couples, older (retirement-age) heterosexual couples, and same-sex couples. Each group has specific concerns, and Money Without Matrimony takes care to explore issues unique to each situation. The authors write:

If unmarried couples take the right approach to financial planning, put in place proper legal documentation, and capitalize on existing laws, it’s possible to nearly equalize the inequities of a system geared toward married couples.

Money Without Matrimony covers a broad range of topics, exploring each from the perspective of the unmarried couple. The book explores:

• Communication. The book stresses that it’s important to go beyond just discussing who’s going to pay the bills this month. Couples need to discuss their money blueprints, and they need to plan their future together.
• Partnership. Money Without Matrimony contains one of the best explorations of the joint or separate finances debate I’ve ever read. The authors explore a variety of different ways to merge household finances. (This is good info even for married folks.)
• Taxes. This is one area where, with proper planning, unmarried couples have an advantage over married couples. This book explains how to exploit this.
• Estate planning. If they don’t plan ahead, unmarried couples can face a world of woe when one (or both) partner dies. It’s vital to document things completely and correctly in order for your wishes to be followed. The authors cover wills, trusts, directives, and more.
• Other issues. Money Without Matrimony looks are more than just financial issues. The authors also explore the complications of children, legal issues such as domestic partnership agreements, and so on.

The book also covers insurance, retirement planning, children, and more. A lot of these topics may seem boring, I know, but they’re crucial for every couple, married or not.

Drama in real life
The best parts of the book are the real-life examples of how couples deal with actual dilemmas. (I love books that do this, which is one reason my book contains lots of stories from GRS readers.) Here’s a prime example of the type of story the book includes (and the issues facing unmarried partners):

Jordan and Betsy shared a home that Jordan initially owned individually. When the couple moved in together, though, they split everything 50-50 and always talked about “their” home and their future together. Betsy just assumed Jordan had changed the deed on the house to include her. It never occurred to either of them, in fact, that the home didn’t belong to both of them. Two years into their relationship, Jordan popped the big question, asking Betsy to marry him. She said yes, but no date was set for the wedding. Jordan’s family still hadn’t warmed to Betsy, so the couple thought it best to wait for a while before tying the knot.

Not long after proposing to Betsy, Jordan died in an automobile accident. Naturally, Betsy was upset and distraught. After the funeral and reception, friends of the couple took her out to dinner. When Betsy finally arrived back at her home, Jordan’s older brother and father were in the process of moving Betsy’s belongings out of the house and into a rented van. Betsy was horrified to learn that her partner had left the house to his brother, according to the terms of his will drafted six years earlier — long before she and Jordan had met. Betsy buried her partner and lost her home in the same day, and she had no recourse.

This story makes my blood boil (and yet it’s unfortunately all too common), but Jordan and Betsy could have avoided this tragedy if they’d planned ahead. That’s what Money Without Matrimony is all about: Making sure that unmarried partners take the steps necessary to share their finances together, both now and in the future.

The bottom line
Money Without Matrimony is a great book. It’s non-judgmental, practical, and packed with advice. If you’re in a committed unmarried relationship, I highly recommend you track down a copy. (This may be difficult: My county library system only has two copies, and the book is out of print. But Amazon has some cheap used copies left.)

And to be honest, a lot of the advice here is great even for married couples!

Note: Here’s the book’s official site, which doesn’t actually have a whole lot of info, though you can preview the first few pages of the book.

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This post is from GRS staff writer April Dykman.

For many people, mindful consumerism starts with questioning the desire to buy Stuff. The reason might be to save money or avoid clutter — maybe both. It’s the first part of a journey to differentiate needs from wants and make mindful decisions about where to spend our hard-earned money.

But at some point, most of us will consume. We’ll buy food or clothing or household items. We’ll need to replace something, fix something, or upgrade something. When we make these purchases, we’re playing a role in a process. Much goes into creating a product and getting it on the shelf, though as a consumer, we don’t see that process. We don’t know if the companies involved in bringing it to us have decent working conditions for employees, pollute water systems, or include additives that pose health risks to our families.

Daniel Goleman, author of Ecological Intelligence: The Hidden Impacts of What We Buy, wrote about considering the global effects of our purchases in his essay, Making the Right Choice:

An organic cotton t-shirt may be called “green” because they didn’t use pesticides or chemical fertilizers when growing the cotton. That’s on the good side of the ledger, to be sure, but if we look into the life cycle of the t-shirt, we discover that organic cotton fibers are shorter than other fibers, so you need to grow a lot more cotton per t-shirt. Cotton is typically raised in arid parts of the world, and it’s a very thirsty crop, so a lot of water is implicated in the production of the t-shirt.

Also, if it’s a colored t-shirt, we have to take into account that textile dyes tend to be carcinogenic. When we consider all these angles, we may come to see that if you change one thing about a product and leave 999 unchanged, it’s not green.

It’s enough to make the average consumer’s head spin. Most people would like to make informed choices and reward companies whose processes make us feel good, but doing this in practice is daunting. If a busy parent is in the grocery store with two children to wrangle, it’s not feasible for that person to stop and trace the life cycles of Cheesy Poufs versus Cheddar Puffs. People can’t be expected to spend hours on the web researching the health, societal, and environmental effects of every purchase. Not gonna happen.

Technology provides the tools
Luckily, it’s getting easier to know what’s behind a brand. Skin Deep and GoodGuide are two web databases that provide the backstory on the Stuff we buy.

• Skin Deep is a safety guide to cosmetics and personal care products researched by the Environmental Working Group. You can search by product, ingredient, or company, and the site will return a hazard rating with the product broken down by ingredients.
• GoodGuide is a database of more than 70,000 food, toys, personal care, and household products that rates the products and companies based on the effects they have so that users can make informed decisions based on what is important to them.

For example, GoodGuide provides information about Quaker Quick Oats, which it rates a 7.3 overall (out of 10), and Nature’s Path Organic Instant Hot Oatmeal, which is rated 6.7. We might assume that the organic brand would be healthier, but in fact it’s higher in sugar than similar products. When it comes to environmental effects, Quaker Quick Oats scores lower for water and energy management. Users can delve deeper into how these ratings are determined by clicking on See All Data.

The brainchild of Dara O’Rourke, a professor at University of California-Berkeley, GoodGuide was developed with experts from Harvard and MIT, with tech input from talent at Google, eBay, Amazon, and Intuit. And the tech part is what makes GoodGuide great. The database is available as an iPhone, iPod Touch, and iPad app that allows users to scan barcodes and compare products. Users also can create personalized shopping lists and lists of products to avoid, making it easier shop mindfully when you’re on the go.

Start small
If you’re interested learning more about where your Stuff comes from, make a few changes and build from there. Don’t feel like you have to throw out all of the “bad” Stuff you own and replace it with the “good” Stuff. To start, pick one product you’re curious about, and see if it’s listed on Good Guide or Skin Deep. How does it score? Is there a better alternative that will still meet your needs? Often the better-rated product also is the less expensive, which is a great bonus. In fact, I’ve slowly replaced my skin-care products with cheaper products that also rate better when it comes to health and societal effects. Sometimes the expensive products packaged in “green”-looking bottles rate surprising low.

I’m interested to know what you think about databases like Skin Deep and GoodGuide. Have you ever wondered how some of the products you buy get to the shelf? Would you use tools like these to learn more about the effects of the Stuff you buy?

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Related Articles at Get Rich Slowly:

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I’m super excited — and more than a little bit scared. My book project is beginning to seem very very real. My publisher just finished laying out the manuscript yesterday, and this morning I received a printout of Your Money: The Missing Manual in its current state.

For some reason, seeing the book laid out makes the project more tangible than it has been before. There’s just something about holding this pile of words that’s now coalescing into something that other people will read.

It also makes me giddy to see the book listed at Amazon. I know this won’t ever be a best-seller like a Suze Orman book or a David Bach book, but it’s fun to see it climb from #540,000 on the Amazon best-seller list to #17,777. I have to say: If I even crack #5,000 I’ll be happy. (Honestly, I’m happy already!)

Ultimately, though, my goal isn’t to get rich by selling a ton of books. (Good thing, too, because that ain’t gonna happen.) My goal is to reach some folks who need help with their money: If I can give them the info they need to turn their financial lives around, then my work is done. I feel like that’s what I’ve been put here for. (Well, that and reading comic books…)

Here’s the copyright stuff and the table of contents:

I’ll spend the next week hunting for those last pesky errors. I’ll read the book aloud (at least once, if not twice), check for typos, double-check my links (the book has tons of links), and make sure my facts are correct. (I’ve been working with FICO, the credit score people, to correct a couple of charts, for example.)

Have a good weekend, everyone! The sun’s out here in Portland, so I’m going to take my first bike ride of the year…

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Related Articles at Get Rich Slowly:

• Missing Money
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For years computer security experts have been preaching that users should never share the same password across their connected lives — at online banking sites, at Amazon, on their Web mail services, even on their cell phones.

Apparently, most people ignore that advice.

A new study by security firm Trusteer found that 73 percent of Web users take their online banking password and use it at other Web sites.  And about half of all consumers utilize the same password and user name at online banking sites and other sites.

"I must say I was very surprised,” said Amit Klein, chief technology officer of Trusteer. “It is surprisingly sad that such a large portion of users use their banking credentials at other sites. … It exposes those users to attacks that would otherwise be impossible. I thought that people would take banking credentials more seriously, but it turns out that in this digital age, this is not the reality."

When consumers use the same password across multiple sites, hacking becomes trivially easy. If a criminal breaks into a smaller Web site — say a site created by a local grocery store — and grabs a cache of passwords, their next step is always the major banking Web sites.  When you consider that 40 percent of U.S. consumers' checking accounts are tied up in the four largest banks, odds are good that the stolen credentials will work for in one of them.

Password overlap also creates an easy end run around sophisticated banking security technology, which is only as strong as the weakest site where the password is used. Banks might enforce strong password creation requirements, for example. But if a consumer uses a bank password it at a poorly defended small site, a hacker can break into the small site, steal the log-in information and essentially crack the bank's high-tech system.

"This is something that should be of huge concern both to banks and to users," said Klein.

Trusteer unearthed the data through use of its Rapport security software, which is designed to warn users when they are about to enter a critical banking password into a site where it doesn't belong — a phishing site, for example. The tool was used to examine the behavior of 4 million computer users during a 12-month period. During that span, the firm found that 73 percent used their online banking password on at least one non-financial Web site.

And it didn’t help much when the banks enforced strict password controls. When a bank allowed consumers to pick a user ID, 65 percent used it on other sites. When a bank assigned a customer ID, 42 percent used it at other sites and 42 percent used both the ID and the password on at least one other site.  

'They don't think it's worth the trade off'
Last year, analyst firm Gartner released a survey that reported similar results. It said two-thirds of consumers use the same one or two passwords across all Web sites they access. 

But Avivah Litan, who directed the Gartner survey, said that choice might not be as unreasonable — or as unsafe — as it seems.

"They are making a choice for convenience over security," she said. "They are using a cost-benefit equation … and they don't want to try to remember 10 different passwords for everything they do. They don't think the trade-off is worth it, honestly."

While password sharing isn't a safe practice, Litan said, complicating your life with multiple passwords isn't exactly a cure-all.

"The truth is criminals steal your passwords lots of ways, such as recording keystrokes, and if they do that, it doesn't matter whether your password is 15 characters and unique or 7 characters and the same for every site. People have figured this out," she said.

Using multiple passwords is a good idea, but Litan said it is important that consumers understand the risks that remain even if strong passwords are used.

"It is another lock on the door but a lock that is easily picked," she said. "Still, it's always better to put as many blocks in the road you can."

Large banks don't rely on simple user/password combinations to identify users anymore, she added.  Numerous technologies are used to prevent fraud through a strategy called "layered security."  Device fingerprinting of PCs is a key tool, she said. Web sites tag computer hardware by monitoring unique characteristics, such as exact processor speed or time and date settings. Sites that use device fingerprinting see fraud rates drop 15 to 20 percent, she said.

Banks also look for suspicious behavior, such as attempted transfers to unusual accounts. Another hacker giveaway: clicks through Web sites that occur at high speed, showing an automated PC — and not a person — is attempting a transaction.  Humans take, on average, about 10 seconds before they click "confirm payment."  Computers controlled by hackers racing through stolen login accounts barely wait at all.

"That's best-of-breed security," Litan said.  "If you as a bank are relying on passwords for security then you have a poor security system."

RED TAPE WRESTLING TIPS
It should be comforting to know that your user ID and password are not all that stands between a hacker and your money. Still, that's no reason to let your guard down. Your banking passwords should be handled with great care, and shouldn't be shared with other Web sites.

And remember, many Web firms that store your critical personal information do not use best-of-breed security on their back end — meaning you are still at risk.  A criminal who stole your Facebook credentials could easily wreak havoc with your life, so protect those accounts, too.

Klein concedes that the vast majority of computer users will never create unique user/password combinations for all their sites. As a more practical goal, he recommends maintaining three "families" of passwords — one for critical financial sites, a second for sites that store your personal information, and a third for generic log-ins.

"And you don’t want to mix those passwords," he said.

 

Become a Red Tape Chronicles Facebook fan or follow me at http://twitter.com/RedTapeChron

This guest post from Amanda is part of a new feature here at Get Rich Slowly. Every Sunday will include a reader story (in the new “reader stories” category). Some will be general “how I did X” stories, and others will be examples of how a GRS reader achieved financial success.

In May of 2008, I graduated with my MBA from a great school. I went straight from my undergraduate career into an MBA program, so despite numerous internships, I didn’t have a great deal of work experience, nor did I have a nest egg of any kind. Luckily, what I did have was a CPA for a mother who taught me the value of saving a buck when I was very young.

I also was able to go to school on a partial scholarship and applied for numerous others while in the program. With all this said, I went to four years of college and two years of an MBA program and came out with around $37,000 in debt.  That’s a large number to swallow; however, as far as education goes, I still look at that as quite a bargain.

Back in May 2008, I was 24 years old with $37,000 owed to good old Sallie Mae. I was starting my first full-time job in June, with a salary of $65,000 plus bonus potential. It wasn’t the $90,000 others from my class were making, but I thought I was doing very well considering I wasn’t yet 35 and I wasn’t moving to a big city (like NYC or DC).

Fast forward to today, roughly a year and a half later: I have $8000 left to pay on my student loans. I also have an emergency fund of around $17,000 and have over $15,000 in my retirement accounts. I’ve gone from having about $1000 to my name (net worth of about negative $36,000) to today where my net worth (emergency fund plus retirement accounts minus remaining student loans) is approximately $24,000. I’ve paid off $29,000 and saved $32,000 in a year-and-a-half: a total of $61,000.
 
How did I do it? I didn’t live like a pauper, but I did and do live frugally. I didn’t do anything that any of you haven’t heard before. I have no secret that hasn’t been revealed on personal finance blogs, but nonetheless, here’s the laundry list of how I’ve tackled my debt and built my savings:

I set goals! Before I began working, I set up my budget and set stretch goals for each month on what I could save/pay off.

I paid myself first and automated my finances. I immediately set up my 401(k) with my company. I set my contribution rate to 10% and didn’t concern myself with company match whatsoever. I figured if I never knew what it was like to have that 10% in my paycheck, I’d never miss it.

I also took a couple hundred bucks (it adjusted over time so there isn’t an exact figure to put here) from each paycheck and immediately moved it over to an ING Savings Account that I set up to build my Emergency Fund. Finally, I set up a Roth IRA where any excess cash could go at the end of each month.

I got a roommate. I wanted to live in a nice, safe area with a pool and a gym. It didn’t have to be the Ritz but I wanted it to be a place I was happy to call home. After looking at the prices of such places, I knew to accomplish my financial goals, I was going to need to get a two-bedroom and split the rent. I found a great roommate and split everything down the middle with them. This kept my rent and utility bills far under the 33% suggested rate. (I paid approximately $650 in rent for those of you who like exact numbers.)

I negotiated on all utilities and kept them to a minimum. I didn’t get a home phone number; my cell phone was all I needed. I had regular cable (no fancy movie channels) and regular internet through a bundle package. I negotiated these rates to the absolute minimum offered and when they tried to raise them, I called the cable company and told them their services were not worth that amount and that I would like to cancel. It was easy and fast and worked like a charm.

I kept the heat and A/C on at limited levels. If it was hot, I used a ceiling fan rather than pump A/C through the whole house. I opened the windows and let the breeze cool off the house. When it was cold, I used heat but also wore socks, sweatpants and a sweatshirt so that I could be warm without making my house a sauna. I used a drying rack as much as possible to save on dryer costs. It also helps keep your clothes from wearing out — an added bonus!

I learned the art of couponing at the grocery store and taught myself how to cook. Every Sunday, I faithfully clipped coupons and used sites like Coupon Mom or Frugal in Virginia to help me match coupons to sales to get the lowest prices possible.  This seemed daunting at first but quickly became a ten to fifteen minute routine which often saved great deals of money

I didn’t buy pre-made food: I cooked from scratch. I found this was cheaper and far healthier! All Recipes was a great and free resource so that I didn’t get bored with the same old meals.

I bought produce that was in season so I could still get fresh fruits and veggies.  I also stuck with apples, bananas, and pears instead of their more expensive berry counterparts. I ate vegetarian a few meals each week.  I didn’t completely take meat out of the equation but did limit my intake of it. I also grew my own. I couldn’t have a full garden but I did grow tomatoes on the back terrace. 

I didn’t eat out often! I probably ate out once to twice a week to keep up with my social calendar.  Instead of eating out, I invited friends to my house or met them for a pot-luck. Finally, I brought my lunch to work almost every day.

I didn’t buy Stuff. Don’t get me wrong: If I wanted something, I bought it. I just evaluated whether it was something I really needed or if that want was only temporary. Usually, I’d wait a week to see if I was still thinking about the item. When I did shop, I used coupons at the stores and Retail Me Not when shopping online. I also shopped the sale section first.

I used the library and swapped books/DVDs with friends. Instead of hitting Barnes and Nobles, I went to the library or did PaperBackSwap. I’ve never been left wanting for something good to read or watch.

I worked out and spent a lot of time hiking outside. Hiking and enjoying the great outdoors is healthy, fun and free! I also did live in a beautiful area for hiking so was very lucky in that regard.

I worked hard at my job. I busted booty to get bonuses and raises at work. I made sure that I gave 110% and that my bosses were happy with my work. Any extra money (bonuses, tax returns etc) went straight into loan repayment after a small celebratory dinner of some kind.

I made side money.  This also went straight into loan repayment. I used eBay to sell items I didn’t want/need anymore. I sold books and DVDs that I no longer wanted on Amazon. I did Swagbucks. It’s amazing how easy it is to get those $5 Amazon gift cards. It’s essentially free money!

Basically, I just didn’t let myself fall victim to lifestyle inflation. I didn’t need to have the latest Coach purse or a brand new car. I took good care of what I did have and bought nice things without the ridiculous price tags. I didn’t blow money at the bar, and I built my social calendar on less expensive outings with friends (picnics, free concerts, dinner parties etc).  

I turned my debt repayment into a game where it was fun to send in that big payment and I turned any shopping into a quest for a great deal. It won’t work for everyone, but it worked for me!

Reminder: This is a story from one of your fellow readers. Please be nice. After nearly a decade of blogging, I have a thick skin, but it can be scary to put your story out in public for the first time. Remember that this guest author isn’t a professional writer, and is just learning about money like you are. Photo by fotographix.ca.

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Related Articles at Get Rich Slowly:

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Over the last few months, my wife and I have been doing a lot of traveling by car. To help pass the time on the road, we’ve been borrowing a lot of books on tape from our local library. On our most recent trip, we finished Dan Brown’s The Lost Symbol (we weren’t big fans) and have started on Ender’s Shadow (so far it’s been good). While both of the audiobooks cost us nothing, since they were from the library, we were able to spend hours enjoying a book (or not enjoying a book) at very little cost.

Imagine my surprise when I learned that The Lost Symbol cost over thirty dollars on unabridged audiobook from Amazon. Thirty dollars is a lot to spend on a book, audio or otherwise. I understand the reasoning, there’s a lot of production value that goes into converting a book to an audiobook (it I thought it was a well done audiobook), but it’s actually quite cheap when you break it down to per hour costs of entertainment.

My closest analogy is video games. If you’re a fan of first person shooter games and own an XBox 360, chances are you’ve been playing a lot of Call of Duty: Modern Warefare 2. I know I have… like it’s older brother, COD 4: Modern Ware, it’s a fantastic game that has some fantastic replay-ability.

On the face of it, $59.99 per game (recently MW2 was lowered to $45), it seems expensive right? I mean one game for over sixty dollars after taxes? Seems absurd until you start comparing it with forms of entertainment.

Here are some forms of entertainment to compare it with:

• Dan Brown’s The Lost Symbol: $31.50 for 17 hours, 51 minutes, $1.76 an hour.
• Call of Duty 4: Modern Warfare 2: $45, at 72 hours so far, $0.63 an hour (and lowering).
• Cable Television – $60 a month, 161.5 hours a month (according to NielsenWire), $0.37 an hour.
• Movie – 2 hours for $10, $5 an hour
• Disney Theme Park – $79 per day, ~10 hours a day, $7.90 an hour

Renting vs. Buying Fun

Notice a theme? You’re either buying or renting entertainment. In the case of audiobooks and video games, you’re buying the entertainment and using it as long as you want. When you’re done, you can sell it or give it away for someone else to enjoy. In the case of the last three, you’re merely renting fun. You can’t sell your TV service or your movie watching experience afterwards.

When you think about it, the decision is a lot like buying or leasing a car. Do you want to buy the car, drive it incrementally for free, or do you want to lease it and effectively pay per use? With entertainment, do you want to rent fun or buy fun and enjoy it over and over? That’s why it makes so much sense to buy things like games, whether it’s video games or board games (or just a deck of cards!), if you want to maximize your entertainment dollars.

How to Maximize Entertainment Dollars

The key to maximizing your entertainment dollars is to try to borrow or buy items that provide perpetual entertainment – books and games (video or board games), rather than rent items that provide a very transient entertainment – such as events (movies, sporting events). When you spent $35 on a board game like Settlers of Catan or Dominion, you get near limitless playability for your dollar.

Sometimes we try to maximize the fun things we can do for free, like taking a stroll in the park, but for the things we pay for, we usually don’t think about maximizing our entertainment dollars quite the same way. A $59.99 game seems expensive because you’re spending $60 all at once, but you’re really getting to enjoy it over a longer period of time.

What are your favorite ways to maximize entertainment dollars?

How to Maximize Your Entertainment Dollar from personal finance blog Bargaineering.com.

Are you as sick as I am of blogs, ebooks and gurus all promising to teach you how to “make money online”? In many cases, they’re people flogging a product that they swear any idiot could use to make a fortune … overnight … on the beach … in just two hours a day…

Let’s get real about this. Making money online, just like making money offline, takes real work. However much you might wish you could just press a button and get a steady income stream going, that’s not how it works. Scams, pyramid schemes, dodgy traders and fly-by-night sites abound: none of these are going to get you closer to paying off your debts or quitting your day job.

However, it is perfectly possible for you to make money online. I’m going to outline five straightforward, no-nonsense, spam-and-scam-free ways to do so. I’ve had experience – i.e. dollars coming in – with each of these areas, and I’ll share some of my best tips.

(Hint: I’m also linking to some useful sources, so you may want to bookmark this post for handy referral.)

In almost all cases, you’ll want to get set up with PayPal so that you can get paid.

1. Freelancing
   First up, freelancing. This is how I got started with my business, Aliventures. Freelancing means selling a particular service, getting paid by clients either by the hour or by the project.

   You can do all sorts of things as a freelancer, but some of the most common freelancing areas online are:

   • Writing: including copywriting, blogging, newsletters, ebooks, articles
   • Designing: including illustration, graphic design, logo design
   • Programming: including web coding, custom software
   • Administration: including accounts, personal assistants

   To get started with freelancing, pick a particular skill that you have, and put together an online portfolio showcasing your work. Tell your family, friends, and Twitter followers that you’re looking for clients.

   Freelancing is becoming much more common as people look for flexible patterns of working (and multiple clients to provide job security) – so there’s a lot of advice, support and help around, often including grants and loans when you’re getting started. Your local Chamber of Commerce – or a similar organization – may be a good source of advice.

   Insider Tips:

   • Specialize. It might seem counter-intuitive, but it’s better to concentrate on one area than try to cover all the bases. For example, writers might choose to specialize in copywriting (and ignore blogging, editing and so on).
   • Approach potential clients directly. Most of the freelance blogging jobs that I have weren’t from applying for advertised jobs – they came through making contact with editors. You wouldn’t be reading this blog post if I hadn’t sent Jay (DLM’s editor) a guest post ( and several hopeful emails) back in 2008!

   
   

   Resources:
   Freelance Switch and Freelance Folder are both blogs aimed at freelancers, and well worth subscribing to by RSS.

   Skellie’s post 30 Days to Become a Freelancer is a great step-by-step plan for new freelancers.

   On Dumb Little Man, there’s some freelance-related advice in:

   • An Entrepreneur’s Guide to Setting Service Rates
   • 8 Important Money Saving Tips for Web Workers
   • 10 Great Ways to Jump-Start Your Creativity




2. Selling electronic products
   Freelancers sell a service. Even when that service results in a product, like a logo, a website or an ebook, it’s custom-made at the request of a particular client. That works well for some people, but what if you want to make money without having to work by the hour or by the project?

   A tried-and-tested way of making money online is to sell electronic, usually downloadable, products. I’m sure you’ve come across a few sites selling ebooks – if you have a particular area of expertise, you can write an ebook (which doesn’t need to be anything like as long as a paper book), and you’ll find buyers. Time-sensitive information does particularly well in ebook format.

   There are also plenty of options if you’re not a writer. You can pay someone to write an ebook for you: then you can market and sell it. Alternatively, you can sell audio or video files, graphical content, software.

   Insider tips:

   • Start with something small, like a $5 or $10 product; the learning curve is usually steep.
   • Either build up an online audience of your own (via a blog or e-newsletter), or partner up with people who have a big audience – offer them commission as an affiliate for your product.

   Resources:

   • Create Ebooks That Sell – article on Copyblogger
   • The Comprehensive Paint-by-Numbers Guide to Writing and Publishing Your Ebook – article on ProBlogger that’s pretty much described by the title!

   Sites where you can sell (and indeed buy!) electronic products include:

   • e-junkie – mainly used for ebooks
   • iStockphoto and fotolia – for graphics and illustrations
   • Theme Forest – for website and blog themes
   • Envato Marketplaces – other sites from the makers of Theme Forest
3. Selling physical products
   If virtual products don’t interest you, how about selling physical ones? You may well have done this already if you’ve ever offloaded some second-hand books on Amazon.com, or if you’ve gotten rid of those wrong-size-wrong-color clothes on eBay.

   You don’t necessarily have to have a large amount of storage space to sell physical products, and you don’t need to spend hours standing in line at your local post office; you can use drop-shipping to outsource warehousing and shipping.

   Many small businesses are run entirely on ebay, often buying stock in job lots (at discount warehouses, for instance) and splitting it up for sale, thus turning a profit per item.

   Artists and crafters can sell handmade products on sites like etsy, where customers are often willing to pay a premium price for uniqueness and quality.

   If you have a site or concept which you could produce merchandise for (online comics often do well with this, and humor blogs), try CafePress.

   Insider tips:

   • Take the time to get a great photo of what you’re selling. Make the photo as large as possible too. (Many new ebay sellers make the mistake of not using good photos.)
   • Use testimonials, especially if you’re selling items which customers would normally want to examine and touch before buying – such as clothes or craft materials.
   • Stick with one site – at least to begin with – so that you can build up feedback from buyers: I found that selling on ebay and Amazon was much easier once I had a good rating.

   Resources:

   • Timothy Ferriss’s book The 4-Hour Workweek: Escape 9-5, Live Anywhere.
   • News article “Doc makes more money selling clothes on eBay” – which gives an encouraging indication of what’s possible, just working part-time!
   • Starting an eBay business – article from startupnation
4. Owning websites
   If you own a website, you’ve got a potentially money-making asset. You can run adverts on the site. A good place to start is Google Adsense. Once your site starts getting a reasonable level of traffic and/or a reasonable Google rank, you can sell advertising directly. (Warning: Google sometimes penalizes sites which sell text links.)

   For an example of Adsense and private ad sales in action, see my site www.theofficediet.com. You’ll notice that:

   • There is a 125×125 banner, as well as a number of links under the headings “Adverts”. These are private ad sales.
   • I’m also running Google Adsense

   I don’t make a living from this site by any means, but I do make several hundred dollars each month from advertising.

   Another method is simply to sell the site, which is often known as “flipping” it. If you have a site that makes regular income (such as through advertising or affiliate sales), then there’ll be interested buyers. A good rule of thumb is that you can sell a site for around 12-18 times the monthly income. You may be able to sell a site which has strong potential – perhaps a good domain name and some high-quality content – even if it isn’t yet generating income.

   You can sell sites – and even great domain names (which should cost under $10 to register) – on the SitePoint marketplace.

   Insider tips:

   • Once you have a large site that’s easily found on Google, advertisers will often come to you. Be prepared for this: decide what you charge for different types of ads, and have a simple means of accepting payment.
   • You may have to decide between advertising income and maintaining the quality of your website. I run text ads and Adsense on www.theofficediet.com because I’m not too attached to that site – I’m much pickier about the ads on my “home” site, www.aliventures.com!

   Resources:

   • My Adsense Tips on the Official Adsense Blog – videos from Darren Rowse (aka Problogger)
   • ProBlogger: Secrets for Blogging Your Way to a Six-Figure Income – by Darren Rowse and Chris Garrett has good information about advertising and about flipping blogs.
   • Find an Undervalued Asset. Fix It Up. Flip It. (Now It’s Web Sites, Not Houses) – article from the New York Times which is a good introduction to the area – and financial possibilities – of flipping websites.
5. Selling other people’s products
   Lastly, perhaps you don’t have anything of your own to sell – and you don’t want to create anything. How about selling other people’s products? This is a great way to let others do the hard work while you reap the rewards!

   Like the other four methods, though, this isn’t without work on your part. Affiliate marketing (acting as an affiliate for someone else’s product, and earning commission on sales which you refer) requires you to have two things:

   1. An audience
   2. Trust

   If you have a blog, e-newsletter or Twitter following, that’s your audience. Establishing trust takes time, though. Some good ways to do it include:

   • Provide high quality content (blog posts, emails or Tweets)
   • Be honest, personable and real – we trust people who we can see as friends
   • Don’t give an overblown review just for sales: mention any bad points about the product too
   • Own every product and use every service that you review as an affiliate

   Note that the FTC has brought out new guidelines, which many bloggers have interpreted to mean that affiliates do need to declare their connection. This is often to your advantage anyway, as it can show that you’re trustworthy and honest. (See Affiliates – New FTC Rules and $11,000 Fines for Non-Disclosure for more information.)

   When looking for products to promote, start with things you already own. You can promote anything sold on Amazon as an affiliate (though the commission isn’t great) and you’d be surprised how many sites and companies have affiliate programs. You can also review a post from Dumb Little Man that lists over 40 ways to make money online.

   Insider tips:

   • Think about what you like in a review – and provide that! I put the price up front in all my reviews, for instance, as I hate not knowing the price of a product till I’ve read a ton of text about it.
   • Give a personal story about your experience with the product or service. If you say in the review that your webhost has great customer service, give a concrete example.
   • Many ebook authors (and sellers of other downloadable products) will let you have a review copy if you have a reasonable-sized blog or newsletter, so you can sometimes get free products this way!

   Resources:

   • What Is Affiliate Marketing? and 10 Tips for Using Affiliate Programs On Your Blog – great introductions to this topic, on ProBlogger
   • How to Suck at Affiliate Marketing – what not to do, from IttyBiz
   • Cloud Living review – where I discuss Glen Allsopp’s comprehensive and beginner-friendly ebook about affiliate mini-sites and blogging.

Any one of the above methods could make you a full-time living online – or could provide you with a great source of side income. Which appeal to you? What skills or resources do you already have that you could leverage? And do you have any other methods to add to the list? Let us know your thoughts in the comments!

Some great news — over the next few weeks, we’ll be uncovering a series of giveaways and freebies on The Digerati Life and hopefully you’ll be around to join in. The one I’d like to mention today is not something that we’re holding here per se, but is actually being hosted by The Money Crashers. But it merits special mention because it’s pretty big!

If you haven’t heard about this already, do check out the massive Money Crashers’ 2010 New Year Giveaway Bash. It’s ongoing till the end of the month, January 31, 2010. I noticed that each time I drop by to check on this giveaway, the prize amount just keeps rising (the prize pot has zoomed up to $7,400+ as of this writing!).

Prizes are in cash and kind such as an Amazon Kindle, iPod Touch, Nano, Shuffle (all things iPod!), gift cards, software and personal finance books and magazines. MoneyCrashers pooled these great prizes together from various sponsors (including this site). The great news is that there will be over 100 winners so that means you have a lot more chances of winning something.

How To Win

In order to win one of these prizes, all you need to do is perform certain tasks or actions in order to earn entries. The more entries you have for the giveaway, the greater your chances of getting selected as a prize winner. The tasks are pretty simple, all you have to do is sign up for the giveaway so your information is properly tracked, then think about subscribing to and following Money Crashers and everyone on the giveaway sponsors list. Here are the basic steps.

1. Join the contest mailing list by signing up here. Your information needs to be tracked for this process.

2. Subscribe to Money Crashers’ RSS feed.

3. Accumulate entries by performing various tasks. Increase the chance of winning something by earning as many entries as possible. Each action completed will garner you a certain number of “tokens” in this case. The full list of tasks is described in the official giveaway page but suffice it to say that by following the twitter feed of a prize sponsor, you’ll get 5 extra entries to be used for the random draw of that sponsor’s particular prize. By following the largest sponsor, @wisebread, you’ll get 10 extra entries!

4. You can follow our twitter feed here for 5 extra entries towards free cash.

5. Winners will be announced on February 3, 2010 through a random draw. Rest assured the information will be well disseminated in the personal finance blogosphere on that day!

For more details, do visit the official giveaway page here. Good luck!

Big Giveaway of Cash & Prizes From Money Crashers!

The other day, I discussed the SmartyPig free savings account, which allows you to address your specific savings goals by allowing others to help contribute to your SmartyPig account. This time, I’d like to introduce a form of checking account (with debit card) that is non-interest bearing, but promises to be high on rewards. So how about receiving perks by using a debit card?

Let’s take a look at the checking account offered by Perkstreet Financial. It offers a number of perks in lieu of paying out an interest rate. If you’re someone who likes to bank online, who wishes to minimize the fees on your accounts, who uses your debit card often and who appreciates rewards and benefits as a banking customer, then maybe this checking account will fit your needs.

Perkstreet Financial Checking Account Features

Here’s what you’ll get when you open a Perkstreet checking account:

• You’ll receive a Perkstreet Financial Visa Debit Card that will give you 1% cash back, or free music or coffee. There are no limits on the rewards you receive, which you can easily redeem online.
• You’ll receive a $50 cash bonus for opening an account. This is a limited time offer (it will expire by the end of the year).
• You’ll get free checks, 24/7 live customer service, free online banking and bill pay.
• There are no account fees, no ATM fees, no minimum balance required.
• You only need $25 to open an account, which you can deposit via check or electronically.
• You can set up direct deposit and make easy online transfers between your Perkstreet checking account and external accounts.
• Your account has FDIC insurance and fraud protection, as is standard for bank accounts.

Checking Account Fees & Rewards

There are some fees you’ll need to be aware of here, such as a charge for overdraft protection ($30), a bounced check fee, a stop payment fee and a monthly inactivity fee of $4.50 per month. These are standard fees you’ll find assessed for most financial accounts, so watch out for these. On the flipside, there are the perks — if you’re a coffee or music lover, then you can get the equivalent of a cup of coffee (at $2) when you spend $200 on your debit card, or an iTune download ($1) when you spend $100. If you prefer a “cash perk”, you’re actually limited to receiving gift cards from certain merchants such as Amazon, Target and Best Buy.

So is this a good deal? It’s fine if you’re a debit card user. But you can certainly consider other alternatives to getting rewarded for your spending. For instance, I have the habit of accumulating credit card rewards and using cash back credit cards, which may offer better deals than Perkstreet’s debit card rewards. If you’ve got your credit card use under control, then consider those credit cards that offer higher rewards (3% to 5% on certain spending categories and 20% savings through online shopping) for your spending. But if you don’t trust credit cards, then you have the option of getting rewards through debit card spending via Perkstreet.

And as alternatives for your savings funds, you may also want to check into free high yield checking accounts and high interest savings accounts which are interest bearing accounts. You’d have to determine if these types of accounts are where you’d prefer to park your money.

Online Banking With Perkstreet Financial

For those curious as to how Perkstreet Financial Account Screens look like, here’s a quick look at some of them.

#1 Check your balance.

 

#2 Perform online bill pay.

 

#3 Review your transactions.

$50 Cash Bonus Details

Some details on the bonus:

1. The offer expires by the close of the year, so you’ll need to act fast.
2. Deposit at least $25 into your new account and keep your account active for 3 months.
3. You’ll receive $50 within 15 business days after the end of the 3rd month of owning your account.
4. The offer is good only for new checking accounts.

$50 Checking Account Bonus With Perkstreet Financial

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